H2825 — An Act expanding access to retirement savings

Summary

An Act expanding access to retirement savings

Bill Text

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The bill amends the General Laws regarding automatic enrollment in deferred compensation programs and makes changes to definitions and operating expenses.

• Section 64 of chapter 29

  independent contractors → contracted employees

  This change redefines the term 'independent contractors' to 'contracted employees'.

• Section 64 of chapter 29

  The state treasurer, on behalf of the commonwealth, may establish an automatic enrollment feature within the deferred compensation program. The automatic enrollment feature shall not require prior authorization by an employee, and is hereby deemed to be an exception to the provisions of the Massachusetts Wage Act or any other state law requiring employee authorization for a payroll deduction or any similar ordinance of a governmental body. The details of the automatic enrollment feature shall be set forth in the deferred compensation plan document and shall include, but not be limited to, the following provisions: (a) automatic enrollment shall apply only to new employees of the commonwealth, meaning employees hired on or after June 1, 2024; provided, however, that for any commonwealth agencies or departments that purchase or make payments to an individual or group annuity contract, custodial account, or any other investment authorized under section 403(b) of the Internal Revenue Code for its employees, automatic enrollment shall only apply at said agency’s or department’s discretion and affirmative election; (b) automatic enrollment shall apply only to new employees of a 'governmental body', as defined in section 64B of chapter 29 of these general laws, if the governmental body elects to implement the automatic enrollment feature for its employees; (c) automatic enrollment may not require more than the IRS safe harbor maximum deferral percentage; (d) the amount of compensation deferred by an automatically-enrolled employee shall automatically increase by a specified amount each year unless the participating employee elects not to participate in auto escalation or elects to defer a different amount than specified; (e) an employee who is automatically enrolled shall no more than ninety days to discontinue participation in the plan; (f) an automatically-enrolled employee who discontinues participation in the plan within ninety days shall receive a refund of their account as soon as practicable after discontinuing participation; (g) a qualified default investment option to receive contributions by any automatically-enrolled employee who does not choose an investment alternative to receive the employee’s contributions; and (h) notice requirements to automatically-enrolled participants in accordance with the Internal Revenue Code and applicable IRS Rulings.

  This addition establishes an automatic enrollment feature for the state’s deferred compensation program, allowing participation without prior employee authorization.

• Section 64B of chapter 29

  The treasurer or, in the absence of the treasurer, the chief financial officer by whatever name that person is called, on behalf of a governmental body, may, at its own election, implement an automatic enrollment feature within its deferred compensation program established pursuant to this section 64B, chapter 29. The automatic enrollment feature shall not require advance authorization by an employee and is hereby deemed to be an exception to the provisions of the Massachusetts Wage Act or any other state law requiring employee authorization for a payroll deduction or any similar ordinance of a governmental body. Subject to the election of each governmental body, any such auto enrollment feature permitted as a part of a governmental body’s deferred compensation program shall only apply to new employees of a governmental body hired on or after June 1, 2024 and such deferred compensation program will be required to include the specifications for auto enrollment detailed in subsections (b) through (h), inclusively, of section 64 of chapter 29 of said General Laws.

  This addition allows local governmental bodies to implement automatic enrollment in their deferred compensation programs without prior employee authorization.

• Section 64E of chapter 29

  and employing not more than 20 persons,

  This change removes the limit on the number of persons employed, potentially allowing more flexibility for the affected parties.

• Section 64E of chapter 29

  Notwithstanding any general or special law to the contrary, the state treasurer, or designee, may seek to reduce operating expenses for the plan through private donations or grants, which may include direct and indirect fundraising.

  This addition permits the state treasurer to seek private funding sources to lower operating expenses for the deferred compensation plan.

Sponsors

• Ann-Margaret Ferrante · Primary

Subjects